Microsoft Word - Project+2021 NEW .. | 24 E E .. Table Par.. 2 1 olcs 1. Compile the Proforma Income statement for Leeds and Creative companies for the year 2020 using percent of sales method. Use the information provided on the excel sheets. (3 marks) 2. Fill in the missing amounts in Leeds and Creative companies' balance sheets. (3 marks) Given that: Leeds market price per share in 2020 = $8. Leeds dividends in 2020 $22.000 Creative market price per share in 2020 =$10, Creative dividends in 2020 = S34.000. 3. Calculate the financial ratios for both companies in 2020. (3 marks) Note: Purchases were %70 of the cost of goods sold for both companies in 2020. Leeds company Creative company Financial Ratios Current ratio Quick Ratio Inventory turnover Average ter v inventory Average collection period Average payment period Asset AVI Debt rati Debito equil 10 Times interest rameitatio Gospofit Operating profilerin Net profil mare ROA .O REDMI NOTE 8 65 AI QUAD CAMERA Microsoft Word - Project +2021 *NEW Aa Bbcc AaBbcc Aabbel ABCD AaBbCD ABCD AalbCeD zubi 10. ac1 1 Table Par... ... 4. Analyze the overall financial situation from a cross-sectional viewpoint. Compare each company's ratios with the industry average. What are the strengths and weaknesses of each company? Which company is best to invest in and why? (3 marks) Financial ratio Curent ratio Quick ratio Inventory turnover Average age of inventory Average collection period Average payment period Asset novel Debt ratio Debt to equity ratio Times interest earned to Gross profit margin Operating profit margin Net profit margin ROA ROT Industry Average 2 1.91 8.12 times 42 days 30 days 50 days 0.85 50% 90% 5 Times 32% 14% 8% 76 12% 5. Prepare the cash flow statement for both companies for the year ended December 31st, 2020, using the indirect method. (3 marks) .O REDMI NOTE 8 CO AI QUAD CAMERA Merosoft Excel-grupet Normal Hall D B Creative company Income statement December 31, 2019 and 2020 2019 2020 $800,000 $900,000 520.000 280,000 Sales Cost of goods sold Gross Profit Operating Expense Selling general and administrative expenses Utilities expense Advertisement expenses Depreciation expense Sundry expenses Total operating expenses Operating Income Interest expense Income before Income Taxes Income taxes (25%) Net Income 2,000 80,000 23111 11 22222 222 500 22222.22 148,056 131,944 25,000 106,944 26,736 $80,208 35.000 cert Banchet Creative Income Statement Ore .O REDMI NOTE 8 8 O AI QUAD CAMERA Microsok Excel - projet Normal red Y UP E15 D B Leeds company Income statement December 31, 2019 and 2020 2019 2020 Sales Cost of goods sold 760 000 Gross Profit 440,000 Operating Expense: Selling, general and administrative expense 120.800 Research and development expenses 600 Utilities expense 20,000 Advertisement expenses 12,000 Depreciation expense 1,000 Sundry expenses 35.000 Total operating expenses 189,400 Operating Income 250,600 Interest expense 18,000 Income before Income Taxes 232,600 Income taxes (25%) 58.150 Net Income $174,450 500 18,000 Les Rince Sheet Led Income statement Care Balance She Creation nume Smet e :: .0 REDMI NOTE 8 CO AI QUAD CAMERA Microsoft Excel project Normal TH 10 - - D 448,000 E 505,500 B Total current assets 515,000 700.000 5,000 5,500 510,000 Missing amount 62,000 150,000 1,020,000 Missing amount $ Property, plant, and equipment Accumulated depreciation Net property, plant, and equipment Goodwill Total Assets Liabilities Accounts payable Wages payable Current portion of long-term debt Accrued expenses Total Current Liabilities Long-term debt Total Liabilities Owner's Equity Common stock: $2.5 par, shares issued and outstanding in 2019: 60.000; in 2020: 75,000 Paid in capital in excess of par Retained earnings Total Owner's Equity 22,000 30.000 6,000 6.000 15,000 21,000 7,000 Missing amount 50,000 60,000 150,000 90.000 200.000 $ 150,000 $ Missing Missing amount amount 270,000 Missing amount 400,000 Missing amount Missing Missing amount amount Le nos acere real ve Belance Sheet Greve come talertelt Is Balance Sheet 9 W WY .O REDMI NOTE 8 O AI QUAD CAMERA Microsoft Excel - project Normal TI eu - D E B B Assets Cash and Cash equivalents Accounts receivable Inventory Prepaid expenses Short term derivative assets 200,000 230,000 50,000 50,500 150,000 Missing amount 18,000 25,000 30.000 40,000 448.000 505,500 Total current assets 515,000 700.000 Property, plant, and equipment Accumulated depreciation 5.000 5,500 Net property, plant, and equipment 510,000 Missing amount Goodwill 62,000 150,000 Total Assets $ 1,020,000 Missing amount Liabilities Accounts payable 22.000 30 000 Wages payable 6,000 Current portion of long-term debt 15 000 21,000 Accrued expenses 7,000 Missing amount Total Current Liabilities 50,000 60,000 Long-term debt 150.000 90.000 Total Liabilities 200,000 $ 150,000 Owner's Equity Common stock $2.5 par, shares issued and Missing outstanding in 2019: 60,000 in 2020.75,000 Missing amount amount Paid in capital in excess of par Els s Balance Sheet Leeds come statement Creative Sheet Chic Statet 270.000 Missing amount 6.000 .O REDMI NOTE 8 CO AI QUAD CAMERA Microsoft Word - Project+2021 NEW .. | 24 E E .. Table Par.. 2 1 olcs 1. Compile the Proforma Income statement for Leeds and Creative companies for the year 2020 using percent of sales method. Use the information provided on the excel sheets. (3 marks) 2. Fill in the missing amounts in Leeds and Creative companies' balance sheets. (3 marks) Given that: Leeds market price per share in 2020 = $8. Leeds dividends in 2020 $22.000 Creative market price per share in 2020 =$10, Creative dividends in 2020 = S34.000. 3. Calculate the financial ratios for both companies in 2020. (3 marks) Note: Purchases were %70 of the cost of goods sold for both companies in 2020. Leeds company Creative company Financial Ratios Current ratio Quick Ratio Inventory turnover Average ter v inventory Average collection period Average payment period Asset AVI Debt rati Debito equil 10 Times interest rameitatio Gospofit Operating profilerin Net profil mare ROA .O REDMI NOTE 8 65 AI QUAD CAMERA Microsoft Word - Project +2021 *NEW Aa Bbcc AaBbcc Aabbel ABCD AaBbCD ABCD AalbCeD zubi 10. ac1 1 Table Par... ... 4. Analyze the overall financial situation from a cross-sectional viewpoint. Compare each company's ratios with the industry average. What are the strengths and weaknesses of each company? Which company is best to invest in and why? (3 marks) Financial ratio Curent ratio Quick ratio Inventory turnover Average age of inventory Average collection period Average payment period Asset novel Debt ratio Debt to equity ratio Times interest earned to Gross profit margin Operating profit margin Net profit margin ROA ROT Industry Average 2 1.91 8.12 times 42 days 30 days 50 days 0.85 50% 90% 5 Times 32% 14% 8% 76 12% 5. Prepare the cash flow statement for both companies for the year ended December 31st, 2020, using the indirect method. (3 marks) .O REDMI NOTE 8 CO AI QUAD CAMERA Merosoft Excel-grupet Normal Hall D B Creative company Income statement December 31, 2019 and 2020 2019 2020 $800,000 $900,000 520.000 280,000 Sales Cost of goods sold Gross Profit Operating Expense Selling general and administrative expenses Utilities expense Advertisement expenses Depreciation expense Sundry expenses Total operating expenses Operating Income Interest expense Income before Income Taxes Income taxes (25%) Net Income 2,000 80,000 23111 11 22222 222 500 22222.22 148,056 131,944 25,000 106,944 26,736 $80,208 35.000 cert Banchet Creative Income Statement Ore .O REDMI NOTE 8 8 O AI QUAD CAMERA Microsok Excel - projet Normal red Y UP E15 D B Leeds company Income statement December 31, 2019 and 2020 2019 2020 Sales Cost of goods sold 760 000 Gross Profit 440,000 Operating Expense: Selling, general and administrative expense 120.800 Research and development expenses 600 Utilities expense 20,000 Advertisement expenses 12,000 Depreciation expense 1,000 Sundry expenses 35.000 Total operating expenses 189,400 Operating Income 250,600 Interest expense 18,000 Income before Income Taxes 232,600 Income taxes (25%) 58.150 Net Income $174,450 500 18,000 Les Rince Sheet Led Income statement Care Balance She Creation nume Smet e :: .0 REDMI NOTE 8 CO AI QUAD CAMERA Microsoft Excel project Normal TH 10 - - D 448,000 E 505,500 B Total current assets 515,000 700.000 5,000 5,500 510,000 Missing amount 62,000 150,000 1,020,000 Missing amount $ Property, plant, and equipment Accumulated depreciation Net property, plant, and equipment Goodwill Total Assets Liabilities Accounts payable Wages payable Current portion of long-term debt Accrued expenses Total Current Liabilities Long-term debt Total Liabilities Owner's Equity Common stock: $2.5 par, shares issued and outstanding in 2019: 60.000; in 2020: 75,000 Paid in capital in excess of par Retained earnings Total Owner's Equity 22,000 30.000 6,000 6.000 15,000 21,000 7,000 Missing amount 50,000 60,000 150,000 90.000 200.000 $ 150,000 $ Missing Missing amount amount 270,000 Missing amount 400,000 Missing amount Missing Missing amount amount Le nos acere real ve Belance Sheet Greve come talertelt Is Balance Sheet 9 W WY .O REDMI NOTE 8 O AI QUAD CAMERA Microsoft Excel - project Normal TI eu - D E B B Assets Cash and Cash equivalents Accounts receivable Inventory Prepaid expenses Short term derivative assets 200,000 230,000 50,000 50,500 150,000 Missing amount 18,000 25,000 30.000 40,000 448.000 505,500 Total current assets 515,000 700.000 Property, plant, and equipment Accumulated depreciation 5.000 5,500 Net property, plant, and equipment 510,000 Missing amount Goodwill 62,000 150,000 Total Assets $ 1,020,000 Missing amount Liabilities Accounts payable 22.000 30 000 Wages payable 6,000 Current portion of long-term debt 15 000 21,000 Accrued expenses 7,000 Missing amount Total Current Liabilities 50,000 60,000 Long-term debt 150.000 90.000 Total Liabilities 200,000 $ 150,000 Owner's Equity Common stock $2.5 par, shares issued and Missing outstanding in 2019: 60,000 in 2020.75,000 Missing amount amount Paid in capital in excess of par Els s Balance Sheet Leeds come statement Creative Sheet Chic Statet 270.000 Missing amount 6.000 .O REDMI NOTE 8 CO AI QUAD CAMERA